Stock Market Trading: 11 October 2013
Yesterday's surge in risk appetite is set to continue as the feeding frenzy for deeply discounted bargains goes unsatisfied.
Concern over the US shutdown and the debt limit had ground away at valuations but the meeting between Obama and the Republicans has been interpreted as a positive sign by markets that the stalemate may be over.
The news was most welcome, with CFD
investor's regaining their confidence and the Dow Jones surging 323 points in its largest daily gain the year so far.
The Dow rose 2.2% to close at 15,126 ahead of the potential compromise between the two political parties.
Nevertheless, details remain sketchy as to the tone of discussions, and it's not clear whether they came out of their trenches to talk peace or bayonet charge each other.
After the cash close, one news outlet interpreted the politicians' poker faced exit from the White House as 'Obama Rejects Republican Proposal'.
This immediately caused an 80 point drop in Dow futures and handed the slightly more astute a truck load of cash.
Any actual flat out rejection of a deal would of course be bearish, but investors should also be wary of a 'can-kick' solution that would leave the problem for a bigger battle down the road.
Stock Market Trading: 10 October 2013
European equities are set to open higher, buoyed by overnight gains in the US.
The reasoning is that a scheduled meeting between Obama and some Republicans later today indicates a glimmer of light in the shut down saga.
However, scepticism is already permeating amongst markets as it appears that only a token delegation will be meeting with Obama and none of the hard line Tea Party cohort.
Whilst hopes rest on a short-term deal, Obama has stated that he won't agree if any conditions placed on him, whilst the Republicans are only likely to agree if there are deficit reduction or healthcare conditions attached. As a result, this meeting already looks like a non-starter.
Although a positive start is expected today, traders should be wary about the meeting resembling a boxing match weigh-in and knocking any optimism about the political stalemate out for the count.
The Dow Jones rose on Wednesday as President Obama nominated Dr Janet Yellen as the new Federal Reserve Chief
Some traders were bullish after the announcement as she is seen to be supportive of the Fed's bond buying programme.
Stocks made modest gains, with the Dow closing up 26 points at 14,802.98, but trading was fairly volatile as investors remain nervous about the future.
Stock Market Trading: 09 October 2013
Another softer start is expected in Europe as the major source of market uncertainty looks no closer to dispersing.
The political factions in the US remain firmly opposed to coming together and, whilst financial markets haven't imploded yet, their patience is certainly beginning to wear thin.
Unfortunately for traders, there doesn't seem to be any pressing need to get things resolved swiftly either, what with the debt limit deadline still being more than a week away.
Thus far, the falls in equity markets
have resembled an orderly exit of risk. However, this is because the main argument against a mass exodus, the 'they can't possibly let the US default because that would be really bad' argument, has managed to provide some support.
Nevertheless, the Republican 'default deniers' have been getting a lot of attention, stating that they won't compromise under any situation, even if it pushes the US past the debt limit.
Whilst markets have considered this kind of talk as facetious brinkmanship, their fanaticism is starting to make some traders concerned that they are actually committed to their words.
The Dow Jones Industrial Average dropped to its lowest level in 6 weeks on Tuesday.
The index fell 159 points to close at 14,776.5 as President Obama decided to take a tougher stance over negations with the Republicans.
Many traders are now looking to cut back on their positions and sell off high performing stocks ahead of the uncertainty over the next few weeks.
Stock Market Trading: 08 October 2013
Another day of inaction in Washington and another grind lower on the European open is expected.
Traders remain cautious over the looming risk that the US will default on its debt as there is still no movement from parties on either side.
With such huge uncertainties in the financial spread betting
market at the moment, no one has the confidence or nerve to place any sizable positions.
The bulls are cautious of a prolonged stalemate and the bears are fearful of a surprise deal being done so the only trading of note is by those taking profits after the September rally.
Despite the global economy continuing to turn and local economic data still being released, it's all taking a back seat whilst the dearth of progress stateside keeps traders stagnant.
As a result, US stocks continued to fall yesterday, with the Dow hitting a one-month low and closing 136.34 points, or 0.9%, lower at 14,936 as the shutdown entered its 7th day.
Stock Market Trading: 07 October 2013
US stocks rallied on Friday, with the Dow Jones posting modest gains of 0.5%, rising just over 76 points to close at 15,072.
The bounce back came on trader optimism that the US government will come to some sort of agreement on the current borrowing limit and so the country will not default on its debt.
Unfortunately, the lack of serious news over the weekend means that European markets are set to see a sizable gap lower on the open.
The US shutdown saga is really starting to annoy the financial markets and what was once thought to be a simple case of chest thumping by politicians may have been underestimated.
The total lack of movement towards a compromise has been taken as a sign that both sides have are resolute that the only way this will be resolved is if the other side capitulates.
Republican House Speaker Boehner's dangling of the fact that they are willing to carry over this issue to the debt ceiling is no longer being taken as a grandiose gesture of brinkmanship but instead the actions of a committed political fundamentalist.